Lululemon invented leggings—the problem is what to sell when they go out of style

In the second quarter, Lululemon sold about 20% fewer leggings. The stock lost 18% in a single trading session. Not because Wall Street suddenly stopped believing in yoga pants, but because a decline like that hits the very product on which Lululemon has built a business worth over $10 billion.

Lululemon didn’t literally invent leggings. It did something economically more interesting: it figured out how to sell them for more than $100.

It transformed a technical garment into a premium category, building around it proprietary fabrics, fit, a community, yoga, wellness, and ultimately a lifestyle. Before, people bought pants for working out. With Lululemon, people began buying an identity strong enough to be worn even outside the gym.

For years, it was a well-oiled machine. The athleisure market was growing, and Lululemon was growing even faster. But being the brand that creates a category comes with a risk: at some point, you can become a prisoner of the very category you’ve built.

The second-quarter 2026 figures are beginning to show this.

Revenue fell 4% to $2.42 billion. In the Americas, still the group’s economic heart, the decline was 8%, and comparable sales fell 12%. It wasn’t just foot traffic that declined: conversion rates and average receipt value also worsened. Fewer customers are coming in, fewer of those who do come in are buying, and those who do buy are spending less.

Operating income fell 13% to $454 million, even though the quarter benefited from $134.5 million in tariff refunds. Without that effect, the margin picture would have been significantly worse.

But more importantly, Lululemon is forecasting a 10–11% decline in revenue for the third quarter and has lowered its full-year estimate to $10.35–10.50 billion, down 5–7% from 2025.

The market did not punish the company for a bad quarter. It priced in the possibility that the problem will persist.

The most sensitive issue is that, in the meantime, customers’ leg shapes are changing.

After years of form-fitting silhouettes, fashion has shifted toward looser pants, wide-leg styles, joggers, and less body-hugging cuts. Management has admitted that sales in the leggings category have fallen by about 20%.

Twenty years ago, Lululemon had to convince a customer that a pair of technical leggings was worth $100. Today, it has to convince her that its leggings are worth $100 when virtually every price point offers its own take on the same product.

And this is precisely where some mistakes have occurred that are hard for a premium brand to absorb. In 2024, the Breezethrough leggings were quickly recalled following criticism about their fit. In early 2026, it was the turn of the new $108 Get Low leggings, which were temporarily taken offline after complaints about the fabric’s transparency during workouts.

Lululemon is not a company in financial trouble. It still has about $1.4 billion in cash, high margins, a global presence, and one of the most recognizable brands in premium sportswear. But the point isn’t the strength of its balance sheet. It’s about whether the brand can maintain the same momentum when the product that fueled its growth loses its central role.